Implied volatility increased substantially in the Scandi FX sphere towards the end of last week after broke above 10.60.
Given the current relatively constructive risk environment (globally), we see a case for renewed downward pressure on implied vol. In this environment, both NOK and SEK should find some support vis-à-vis EUR and USD. Moreover, note that our economists are more bullish than consensus on the Swedish Q4 GDP release (due on Thursday). See Reading the Markets Sweden , 22 February 2019, for details. If we are right, it could curb EUR/SEK upside risks in the short term.
Hence, given the current spot and vol. levels, we see value in selling 1M EUR/SEK calls (we recommend selling 20-35 delta calls).
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